Lin Musheng Group sells the Zhuhai International Circuit, analysts have a positive opinion
Lin Musheng Group sells the Zhuhai International Circuit, analysts have a positive opinion
Lin Musheng Group $LBS(5789.MY$It was announced on Wednesday that its subsidiary Lamdeal Investment Co., Ltd. (LIL), which owns the Zhuhai International Circuit, will be sold to Huafa City Operations (Hong Kong) Limited (HUOHK) at a price of 192 million yuan (approximately RM125 million).
In addition to cash payments, the buyer will also receive all of LIL's debts to repay Lam Musheng Group's 227.8 million yuan (approximately RM147.9 million) arrears.
In this regard, CIMB research analysts have a positive attitude. The main thing is that the business has always been unprofitable, and the post-sale period will release asset value and cash out for the group.
Looking back, Lin Musheng Group acquired LIL in 2013, mainly because management anticipated the huge potential of the racetrack land, which would provide an opportunity for the group to enter the local industry.
However, in recent years, the racetrack has faced an increasingly severe business environment, including land amortization and strict noise-related sustainability compliance challenges, and lost RM9 million and RM8 million respectively in the 2022 and 2023 fiscal years.
Analysts expect that the sale plan will be completed in October and will bring the group a one-time profit of about RM80 million, and the group's debt ratio will drop from 0.42 times to 0.38 times.
Also, after excluding losses caused by the racetrack business, we adjusted our profit forecast for the next 3 fiscal years, increasing 2%, 5%, and 4%, respectively.
Maintain a target price of 88 cents and a “hold on” rating.
However, the market doesn't seem to buy into this deal. $LBS(5789.MY$Trading was suspended for one day in line with the announcement of the above major events. After trading resumed on Thursday morning, stock prices plummeted.
Source: Nanyang Siang Pao
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